The paper "Rio Tinto Strategic Management Issues" is a great example of a management case study. Based in the UK, Rio Tinto is known to be one of the leading mining groups globally. It is a conglomerate of Rio Tinto Plc. and Rio Tinto Limited (Harvey, 1981, p. 1894). The former is a London listed company while the latter is listed on the Australian Securities Exchange. With its core business as finding, mining, processing of various mineral resources and supplies of both metal and minerals, Rio Tinto has remained as one of the best companies in meeting the growing needs of persons worldwide.
The company has continued to contribute immensely to improvements in living standards of persons (Kapelus, 2002, p. 283). Strategic Management Issues One of the strategic issues that are identified is the increase in costs of iron ore that makes it a real threat to the company. The high set up costs for the company is another strategic management issue. The high-cost levels are mainly triggered by the control of the government that happens through leasing and licensing. The government has been setting high costs and this definitely has been a barrier to entry for most of the companies.
Additionally, there is the aspect of other materials that are used instead of iron ore. These substitutes are in themselves a threat to the company. The main substitute is the scrap metals that are relatively cheap in comparison to the iron core. The management of Rio Tinto has to be strategic enough to ensure that it addresses such issues lest their mining and productivity rendered less competitive in the market. Inflationary policies are some of the issues that face the firm.
This is a problem that needs to be addressed going forward. Model Applicable The model under consideration for this case is Porter’ s five forces. This model is applied to assist in the comprehension of the strategic position of Rio Tinto in the market. Applying the model assists explains the effects of different aspects of it including the government. The effect of the government is great within the mining industry and this has necessitated the addition of it in the model (Porter, 2008). Given that the fluctuating power of both buyers and suppliers in the government are predominant, it then makes this model appropriate (Bose, 2008, p.
516). Through the model, the position of the firm can be gauged and challenges that exist also identified for the sake of their address in future. Through the model, the competitive nature of rivals is explored and the exact position of the firm is explained (Narayanan and Fahey, 2005, p. 219). A case in point is competitiveness and rivalry that was witnessed when BHP Billiton made attempts to acquire Rio Tinto.
Rio Tinto would protect itself through its own strength and as well by the support of the regulatory authorities. The nature of such rivals is only clear through the model. The threats of entrants and substitutes for this market are covered using the model (Porter, 2008). Through the model, we get the full insight into the new entrants and the entry barriers that exist, the sources of bargaining power, the substitutes, buyers in the market and their bargaining powers. This together helps to explain some of the strategic management issues that Rio Tinto face.
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