SWOT Analysis of Fortescue Metal Group Limited - Case Study Example

SWOT ANALYSIS OF THE CASE A lot of business firms with an objective of achieving a competitive advantage for giant firms in the industry need to regularly analyse all the aspects of the company’s operations and the stratagems. This is the only single method that the company has a chance of a healthy competition in the market. This is the only way that the company stands a chance of competing healthily in the market. SWOT analysis has been used by many companies since it can help a company expand its future plans. This is only achievable through reviewing the firm’s strengths, weaknesses, opportunities and threats. This is vital because the SWOT analysis explores and puts into consideration both internal and external issues as entity to each company. For example, in this case, Frotescue metal group limited or other companies are required to consider trade explicit factors to assist them in conducting a fruitful business analysis. Figure 5 shows the internal and external analysis of Frotescue and threats, opportunities, weaknesses and strengths are identified. Strengths Rich resource in Pilbara region. Huge production. High brand recognition Weaknesses Poor management of costs. High capital intensity. Opportunities Abolished both mining and carbon taxes. Approved foreign investment. Remain strong demand. SO Strategies The company has close proximity to the global growth market of Asia and China Become the global larger traders and producers of iron ore Abolish mining and carbon taxes and focus on rich resources in Pilbara to increase production to retain the high demand of goods that the company has (s 1+2 / o 1+3) WO Strategies Increasing the import of iron ore from the China Lower the capital intensity in the company through abolishment of both mining and carbon taxes( s2/ o1) Threats Fall of iron prices. Slowdown of Chinese economy. ST Strategies To increase the export rapidly in the coming years to over 30 million tonnes Increase the production of the brand using the rich resources in Pilbara region and also with utilization of the low iron prices ( s1 + 2/ t1) WT Strategies Reduce the intensity of capital that is used in Chinese economy. Costs on using capital in the economy should also be reduced ( w1+ 2/ t 2) Expand the newer market of the company globally SO Strategies Exploit new resources in Pilbara Due to the rich resources that are available in Pilbara, the company is able to abolish farming at the time and focus on the resources as through the resources, the firm will be able to increase production and manage the high demand of products that they have. Increase in foreign investment1. The strategy of exploiting more resources will also enable the company to increase foreign investment as there will be production of more goods when exploitation is carried out and resources increased. The company has close proximity to the global growth market of Asia and China The company’s target is mainly China. The economy of Australia and its mining States have really grown due to the strength of the Chinese Economy. The close proximity is as a result of the modernization and growth of the Chinese economy. Become the global larger traders and producers of iron ore Due to growth and modernisation of the Chinese economy, the global market has had a greater demand on the coal and iron ore of Australia. As a result a greater demand has been created on the company’s product. This has therefore facilitated the company to grow its produce across the market. WO strategies Lower capital intensity Lowering of capital intensity in the company will enable management of the company’s weakness of high capital intensives. The lowering is conducted through abolishment of both mining and carbon taxes. When the taxes are lowered, the company will be able to well manage the lower rates hence reducing the problem of poor cost management2. Increasing the import of iron ore from the China The company strategizes to increase their import by expanding and increasing their capacity of the company to greater heights thus improving market share and export ST strategies Increase production of the brand The strategy of increasing productivity of the demand in the company will be carried out by the company focusing on the resources that are available in Pilbara region and also taking advantage of the low prices of iron. Combination of the two aspects will lead to increase in production of the brand hence will also lead to high recognition of the brand in the markets where it is sold3. The management of the company through the strategy will be made simple To increase the export rapidly in the coming years to over 30 million tones The company strategizes this in order to have a perfect fund raising capability by issuing various financial instruments WT strategies Capital intensity reduction Reduction of capital intensity used in the company is aimed at reducing the effects ion the company that comes as a result of poor management of costs. The reduction is done din the Chinese economy due slowdown in the economy4. Reduction of capital intensity in the Chinese economy will leave the company with capital that it will be able to well handle. This factor results tom increased competitive advantage as there will be little wastage of resources. Expand the newer market of the company globally The company can only do this by increasing their promotion to other countries and come up with product differentiation with the help of dynamic technology. 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