Home Solutions MANAGEMENT AND BUSINES CONTEXT RIO TINTO
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Rio Tinto is the British cum Australian multinational company in the area of metal and mining corporations. It is founded in 1873, with the investment in a mine complex in Spain from the government of there. The company is growing to the large series of the mergers and the acquisitions so that they can place themselves among the tip leaders in the world. There operations are related to the productions in the areas of iron ore, uranium, diamonds and coal (Mulligan, 1999). There primary focus is on the extraction process of the minerals but now they are indulged in the refining part also. The study mainly concentrates on the organizational structure, factors in the environment affecting the operations of the company, organization and the business practices done by them, functions of the diverse firms and the affects of all these factors on the process of the decision making in the organization. It covers the business strategies formulations and the analysis of the environment for focusing on the domestic and the contextual factors available present in the environment ("Rio Tinto announces iron ore expansion", 2008).
The business strategy of the Rio Tinto is affected by the number of the global trends in the industry that are impacting the whole of the mining the industry in the world for coming decades. The executives there are having the view that they are ready for the change and preparing for the changes. There plans are: to thrive through the changes and the challenges, not only to survive ("New Rio Tinto steel and powder director appointed", 2012). They used to provide seminars to their investors and their analyst in accordance to the operations, strategies, targets in the financial terms and the opportunities to them so that they can interact with the executive teams of the organization. Their strategy is towards the world class assets, operating excellence and the strong balance sheet. They focus on the generation of the cash with their relentless capital i.e. providing the constant returns to the shareholders and then also investing for the long term ("A strategy to survive and thrive", 2017). They value their proposition with their Long term strategy of Tier 1 assets, delivering more than 2% of CAGR CuEq level of growth and by having the license to operate there in the worldwide area. Their cash focus is on the creation of the value other than the volume, saving more than $2billion over year 2017, team and the cultural performance by safety and commercial and the operational excellence. In terms of the discipline of their Capital and the shareholder return, they focus on having the strong balance sheet format, 40-60 % of the returns through their cyclic operation, shaping and improving their portfolio. The organization structure will now focus on the innovation and the development process under the new structure related to the aluminum, iron ore, copper and diamonds ("Rio Tinto unveils new organizational structure and executive team to drive performance", 2017).
The global trends that affects the business are: “Productivity and the margins”- as the mining productivity is declining so the company is changing their marginal tone in any conditions as said by their chief executive, the company is focusing in the emerging technologies and the optimization their value chain that is having the big part to be played in their productivity improvement. For this the company is making the commitment of the generation of US $5 billion of the cash flow in the coming years, meanwhile it is trying to achieve their targets in 2017 of saving US $2 billion in terms of their cash savings. The next global trend is, “A maturing China”- the executives of the company believes that the country is remaining the key strategic player in the mining industry, due to the globalization and the industrialization there in the world there is increasing demand of the products by China ("Rio Tinto combines mineral operations", 2006). There is uncertainty in the increasing global influence for China therefore the company is offering strong products by long term relationships with their customers and also having the strong position in the market. The other is the “Resilience”- the key challenge before the company is the management of the change and the pace of the change management, according to the executives of the company it is operating with the strong balance sheet and with the 1 tier operating assets. As the vitality and the complexity increase the industry is seeking their partnership more effectively with the customers, employees, government and their communities. The next trend is “the focus on their 4Ps”- with their Portfolio in terms of their world class assets, performance in terms of their safety and the operating excellence, partners – with range of their stakeholders so to obtain and to maintain the license of tier operations, People- by building the distinct capacities for delivering their performance ("Codexis announces extension of collaboration with Rio Tinto", 2003).
For implementing their strategies, the company use to analyze each and every factor that influences their working environment by doing their SWOT analysis. Their Strengths are in terms of their- Reputable corporations that are in Melbourne in Australia, since 1873, the manufacturers of their products are famous among the people in terms of their uniqueness and the quality, the company use to manufacture the variety of their products including diamond, copper, coal, aluminum, gold that are used in the salt, borates, titanium oxide and other industries. It is considered as the largest mining company in the Australia that is serving worldwide with the huge employee’s base of more than 68000 and it showing the upward trends in terms of their revenues and profits. Their Weakness is their negative growth due to lesser sale in the current years, even the prices of iron is feeling that results in the lesser revenues and the company is also incapable of facing various risks related to its country. The Company is facing opportunities in the current scenario- India and the China re emerging as the growing segment for the company, demand of the coal and the coal related products are increasing worldwide, the company is focusing on the divestment related to the weak segments there and also further investing into eh strong segments for example- coal is the best area of the market to be invested for. It should address the main concern of the environment that is related to the society like doing the charity, social works, and donations (Sanz, Rodríguez, Díaz, & Amils, 2011). There are many Threats to the organization as there is decline in the prices of the copper and the iron ore, the investors are seeking the high returns on their investments, the economy is falling down that can impact the overall financial and the economical performance, there is limited competitors still they could grab the market share, the environmental and the global factors are the matter o the concerns, there is chances of natural disasters always and the financial crises of the European countries ("Madagascar & South Africa: Rio Tinto – TiO2 feedstock & talc", 2009).
The company is still facing some critical issues related to the their furious leaders in their local areas ("Rio Tinto sells more assets", 2010), struggling for cash, in struggle with the government of the country as Australia is having the responsibility of former colonial power for authorizing the mines and asking the government to contribute the special funds in relation to the repairs of the rivers and compensating the people for loss occurred to them due to the in toxic substances in the rivers harming their lives ("Rio Tinto to sell Alcan Composites", 2009). “The Rebellion”-it is the mine that is not operated for more than quarter of century and the people are angry for the destructions there in terms of the environmental issues, broken sites, seized explosives and are lasting as it is for more than decade. The people there are complaining for the destruction of the rivers and the natural resources that are the source of their food and their lifestyle, the company is currently facing these issues and has to work on it. Rio announced last year that it had freely surrendered 53.8% share of their Bougainville Copper Limited after flirting in relation to the quitting or the reopening of the mine (Flitton, 2017).
The organization is working on the improvement of their organization structure according to the new demands and the current trends coming in the economy at both global and the domestic level. The company is moving towards the phase of the growth by the analysis of the each factors present in the environment that is affecting its growth and development by doing their SWOT analysis. There focus of all the strategies is towards the value, long term perspectives, and superior returns. Their strategy matches with the globe and domestic trends and is implemented with the involvement of all the people who are related to them. Thus the strategies of the company are in accordance to the environmental structure, diverse functions and by supporting the risks and the opportunities also. The company is thus moving towards the growth phase by all their efforts (Marin, 2012).
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