Compass Minerals International

Written Assignment Unit 6

University of the People

Course: Strategic Decision Making & Management        

Description of case:

The case describes the strategic challenges facing salt producer Compass Minerals International, as its CEO tries to figure out what moves to take in future to respond to competition and environmental challenges, and build value for its investors.

Strategic Moves:

Early adopter: Compass Mineral’s site in Lyons, Kansas was opened around 1911. Due to the high costs of opening new mines, Compass Minerals made capital investments in small increments over a period of time, to improve technology and increase capacity (Henderson, R., et. al., 2009). 

Strategic locations: What estate-agents say about residential properties also applies to many businesses, that the three most important considerations are location, location, location.  North American Salt maintained a network of about 75 depots for the storage and distribution of highway deicing salt located on the Great Lakes and the Mississippi and Ohio River systems where the Goderich, Ontario and Cote Blanche, Louisiana mines were located (Henderson, R., et. al., 2009). Compass Minerals also owned and operated a couple of salt packaging facilities in Illinois and Wisconsin which also served consumer deicing and water conditioning customers in central, western and parts of the northeastern United States (Henderson, R., et. al., 2009). 

Strategic hiring: Compass Minerals had 1,541 employees, 725 of which were employed in the United States (Henderson, R., et. al., 2009).  Since one-third of its labor force was being represented by unions, the organization negotiated a deal that would be affair on both sides of the table. It negotiated the ability to lay off workers in adverse economic times, while also instituting a policy of variable pay to share in the upside when the firm has a good year.

Strategic Investments: Compass Minerals invested in Salt mines that have a 4 times larger capacity to yield as compared to competitors such as the Goedrich, Ontario Mine (Henderson, R., et. al., 2009). 

Analysis:

Compass Minerals’ subsidiary, North American Salt, was the third largest producer of salt in the country. Its biggest share of revenue, constituting just over 50% of the total sales came from general trade salt. Highway deicing and chemicals constituted about 40% of its salt sales (Henderson, R., et. al., 2009). 

Michael Ducey, the CEO of Compass Minerals, established the business around a set of deeply held core values. He set safety of his staff and environment as one of the top priorities since mining was inherently hazardous compared to other chemical operations in the industry. He also invested in creating a highly motivated and well-trained workforce that was compensated fairly with the times. The quandary that made him nervous prior to going IPO was how the market would react in the coming months and years. Although salt remained a large and important market in deicing highways, the potential for tougher regulation against the use of salt in highway deicing and the food industry was a potential threat as concerns grew about its effects on both the environment and human health (Henderson, R., et. al., 2009).