Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit
In 2013, Rio Tinto was expected to begin commercial shipments from Oyu Tolgoi, a copper and gold mine in the Gobi Desert of Mongolia. Oyu Tolgoi was one of the last great unmined deposits in the world, and, once operations were in full swing, was expected to constitute around a tenth of Rio Tinto's profits and over a quarter of Mongolia's GDP. But the terms of the deal were being threatened by elections in Mongolian and a change in voter sentiment towards the project. With around $6 billion invested, Rio Tinto had to figure out how to make its investment work out. Meanwhile the Mongolian government, facing scorching economic growth rates, had to lead the country through its most significant transformation since the time of Ghengis Khan nine centuries earlier.
Authors :: Eric Werker, Battushig Batbold, Kelsey Kennedy, Zanna McComish
Swot Analysis of "Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit" written by Eric Werker, Battushig Batbold, Kelsey Kennedy, Zanna McComish includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Oyu Tolgoi facing as an external strategic factors. Some of the topics covered in Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit case study are - Strategic Management Strategies, Financial management, Government and Global Business.
Some of the macro environment factors that can be used to understand the Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit casestudy better are - – increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies,
talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Oyu Tolgoi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Oyu Tolgoi 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 Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit can be done for the following purposes –
1. Strategic planning using facts provided in Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit case study
2. Improving business portfolio management of Oyu Tolgoi
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Oyu Tolgoi
Strengths Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Oyu Tolgoi in Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit Harvard Business Review case study are -
Ability to recruit top talent
– Oyu Tolgoi is one of the leading recruiters in the industry. Managers in the Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Oyu Tolgoi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Oyu Tolgoi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Oyu Tolgoi is one of the most innovative firm in sector. Manager in Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Oyu Tolgoi are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Oyu Tolgoi 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 Eric Werker, Battushig Batbold, Kelsey Kennedy, Zanna McComish 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Oyu Tolgoi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Oyu Tolgoi has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Global Business field
– Oyu Tolgoi is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Oyu Tolgoi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Oyu Tolgoi in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Oyu Tolgoi is present in almost all the verticals within the industry. This has provided firm in Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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.
Strong track record of project management
– Oyu Tolgoi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Oyu Tolgoi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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.
Weaknesses Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit are -
Aligning sales with marketing
– It come across in the case study Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit can leverage the sales team experience to cultivate customer relationships as Oyu Tolgoi is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Oyu Tolgoi, firm in the HBR case study Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Oyu Tolgoi has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Oyu Tolgoi has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Oyu Tolgoi 's lucrative customers.
Slow to strategic competitive environment developments
– As Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit HBR case study mentions - Oyu Tolgoi takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Oyu Tolgoi is dominated by functional specialists. It is not different from other players in the Global Business segment. Oyu Tolgoi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Oyu Tolgoi to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Oyu Tolgoi 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.
High cash cycle compare to competitors
Oyu Tolgoi 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Oyu Tolgoi 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.
Lack of clear differentiation of Oyu Tolgoi products
– To increase the profitability and margins on the products, Oyu Tolgoi needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit | 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 Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit are -
Better consumer reach
– The expansion of the 5G network will help Oyu Tolgoi to increase its market reach. Oyu Tolgoi 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.
Developing new processes and practices
– Oyu Tolgoi can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Oyu Tolgoi 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 Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Oyu Tolgoi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Oyu Tolgoi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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.
Building a culture of innovation
– managers at Oyu Tolgoi can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Manufacturing automation
– Oyu Tolgoi can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Oyu Tolgoi 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Oyu Tolgoi can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Oyu Tolgoi is facing challenges because of the dominance of functional experts in the organization. Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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.
Loyalty marketing
– Oyu Tolgoi has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Oyu Tolgoi can use these opportunities to build new business models that can help the communities that Oyu Tolgoi operates in. Secondly it can use opportunities from government spending in Global Business sector.
Leveraging digital technologies
– Oyu Tolgoi 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Oyu Tolgoi to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Oyu Tolgoi to hire the very best people irrespective of their geographical location.
Threats Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit are -
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 Oyu Tolgoi.
High dependence on third party suppliers
– Oyu Tolgoi 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.
Regulatory challenges
– Oyu Tolgoi 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 Global Business industry regulations.
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. Oyu Tolgoi 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 Oyu Tolgoi 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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Oyu Tolgoi in the Global Business sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Oyu Tolgoi in the Global Business industry. The Global Business 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.
Stagnating economy with rate increase
– Oyu Tolgoi can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Oyu Tolgoi is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Oyu Tolgoi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Oyu Tolgoi has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Oyu Tolgoi needs to keep up with the evolution of technology in the Global Business 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit, Oyu Tolgoi may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Rio Tinto and Mining in Mongolia: The Oyu Tolgoi Deposit 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 Oyu Tolgoi needs to make to build a sustainable competitive advantage.
