Molycorp: Financing the Production of Rare Earth Minerals (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Molycorp: Financing the Production of Rare Earth Minerals (A)
Molycorp, the western hemisphere's only producer of rare earth minerals, was in the middle of a $1 billion capital expenditure project in its effort to become a vertically integrated supplier of rare earth minerals, oxides, and metals. Yet it had just reported lower than expected revenues and earnings for the second quarter of 2012. In response to the announcement, its stock price fell 29% (its stock price had fallen from $77 to $11 in the past 18 months). The weakening financial performance was due in large part to falling prices for rare earth minerals. With less internally-generated cash flow available to fund the project, management had to decide: how much capital to raise, what kind to raise, and when to raise it. These decisions would determine its capital structure, at least in the short term, as well as its ability to implement its business strategy.
Swot Analysis of "Molycorp: Financing the Production of Rare Earth Minerals (A)" written by Benjamin C. Esty, E. Scott Mayfield includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Minerals Rare facing as an external strategic factors. Some of the topics covered in Molycorp: Financing the Production of Rare Earth Minerals (A) case study are - Strategic Management Strategies, Budgeting, Competition, Financial analysis, Financial markets, Managing uncertainty, Manufacturing, Marketing, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Molycorp: Financing the Production of Rare Earth Minerals (A) casestudy better are - – geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, wage bills are increasing, there is backlash against globalization,
central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Molycorp: Financing the Production of Rare Earth Minerals (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Molycorp: Financing the Production of Rare Earth Minerals (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Minerals Rare, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Minerals Rare operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Molycorp: Financing the Production of Rare Earth Minerals (A) can be done for the following purposes –
1. Strategic planning using facts provided in Molycorp: Financing the Production of Rare Earth Minerals (A) case study
2. Improving business portfolio management of Minerals Rare
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Minerals Rare
Strengths Molycorp: Financing the Production of Rare Earth Minerals (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Minerals Rare in Molycorp: Financing the Production of Rare Earth Minerals (A) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Molycorp: Financing the Production of Rare Earth Minerals (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Minerals Rare in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Minerals Rare is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Benjamin C. Esty, E. Scott Mayfield can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Minerals Rare has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Molycorp: Financing the Production of Rare Earth Minerals (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Minerals Rare
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Minerals Rare does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Minerals Rare has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Molycorp: Financing the Production of Rare Earth Minerals (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Minerals Rare is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Minerals Rare is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Molycorp: Financing the Production of Rare Earth Minerals (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Minerals Rare is present in almost all the verticals within the industry. This has provided firm in Molycorp: Financing the Production of Rare Earth Minerals (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Minerals Rare is one of the leading recruiters in the industry. Managers in the Molycorp: Financing the Production of Rare Earth Minerals (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Minerals Rare in the sector have low bargaining power. Molycorp: Financing the Production of Rare Earth Minerals (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Minerals Rare to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Minerals Rare has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Molycorp: Financing the Production of Rare Earth Minerals (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– Molycorp: Financing the Production of Rare Earth Minerals (A) firm has clearly differentiated products in the market place. This has enabled Minerals Rare to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Minerals Rare to invest into research and development (R&D) and innovation.
Weaknesses Molycorp: Financing the Production of Rare Earth Minerals (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Molycorp: Financing the Production of Rare Earth Minerals (A) are -
Skills based hiring
– The stress on hiring functional specialists at Minerals Rare has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Need for greater diversity
– Minerals Rare has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Molycorp: Financing the Production of Rare Earth Minerals (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Minerals Rare 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Molycorp: Financing the Production of Rare Earth Minerals (A), it seems that the employees of Minerals Rare don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Minerals Rare products
– To increase the profitability and margins on the products, Minerals Rare needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Minerals Rare supply chain. Even after few cautionary changes mentioned in the HBR case study - Molycorp: Financing the Production of Rare Earth Minerals (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Minerals Rare vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Minerals Rare has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Minerals Rare, firm in the HBR case study Molycorp: Financing the Production of Rare Earth Minerals (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Minerals Rare needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Molycorp: Financing the Production of Rare Earth Minerals (A), in the dynamic environment Minerals Rare has struggled to respond to the nimble upstart competition. Minerals Rare has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Molycorp: Financing the Production of Rare Earth Minerals (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Minerals Rare has relatively successful track record of launching new products.
Opportunities Molycorp: Financing the Production of Rare Earth Minerals (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Molycorp: Financing the Production of Rare Earth Minerals (A) are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Minerals Rare can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Minerals Rare to increase its market reach. Minerals Rare will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Minerals Rare can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Minerals Rare can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Molycorp: Financing the Production of Rare Earth Minerals (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Minerals Rare in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Minerals Rare can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Minerals Rare can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Minerals Rare can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Minerals Rare can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Molycorp: Financing the Production of Rare Earth Minerals (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Minerals Rare is facing challenges because of the dominance of functional experts in the organization. Molycorp: Financing the Production of Rare Earth Minerals (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Minerals Rare can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Minerals Rare to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Minerals Rare in the consumer business. Now Minerals Rare can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Minerals Rare has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Molycorp: Financing the Production of Rare Earth Minerals (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Minerals Rare to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Molycorp: Financing the Production of Rare Earth Minerals (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Molycorp: Financing the Production of Rare Earth Minerals (A) are -
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Minerals Rare can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Minerals Rare with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Minerals Rare can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Molycorp: Financing the Production of Rare Earth Minerals (A) .
Technology acceleration in Forth Industrial Revolution
– Minerals Rare has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Minerals Rare needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Minerals Rare business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Minerals Rare needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Minerals Rare.
High dependence on third party suppliers
– Minerals Rare high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Minerals Rare in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Minerals Rare will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Minerals Rare demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Minerals Rare needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Weighted SWOT Analysis of Molycorp: Financing the Production of Rare Earth Minerals (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Molycorp: Financing the Production of Rare Earth Minerals (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Molycorp: Financing the Production of Rare Earth Minerals (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Molycorp: Financing the Production of Rare Earth Minerals (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Molycorp: Financing the Production of Rare Earth Minerals (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Minerals Rare needs to make to build a sustainable competitive advantage.
