Newmont in Peru SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Newmont in Peru
Describes events associated with Vladimiro Montesinos, Peru's intelligence chief and advisor to President Fujimori, his network, and interventions in affairs of the Newmont Mining Corp. Newmont, a U.S. company established in 1921, proclaimed its corporate values to be "behaving with integrity, working loyally, inspiring trust, telling the truth, caring for our colleagues and cooperating with our community." Yet, on February 26, 1998, Lawrence T. Kurlander, a vice president of Newmont, met with Vladimiro Montesinos Torres in Montesinos' office at the Servicio de Intelligencia Nacional (the national intelligence service) to seek his help in getting a resolution favorable to Newmont in a quarrel with the French company Bureau de Recherches Geologiques et Minieres (BRGM) over their shared ownership of the Yanacocha mine. The mine was the richest gold mine in Latin America and one of the biggest in the world. BRGM wanted to sell part of its 25% share in Yanacocha to Normandy Ltd., an Australian mining company. Newmont sued to block the sale and to gain control of the mine for itself. The dispute had made its way to the Supreme Court of Peru. Montesinos secretly taped his conversation with Kurlander, as was his habit, and the tapes provide a rare inside view of how business gets done where the rule of law is subordinated to political influence.
Swot Analysis of "Newmont in Peru" written by John McMillan, Pablo Zoido includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Newmont Montesinos facing as an external strategic factors. Some of the topics covered in Newmont in Peru case study are - Strategic Management Strategies, Emerging markets, Networking, Regulation and Global Business.
Some of the macro environment factors that can be used to understand the Newmont in Peru casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
cloud computing is disrupting traditional business models, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Newmont in Peru case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Newmont Montesinos, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Newmont Montesinos 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 Newmont in Peru can be done for the following purposes –
1. Strategic planning using facts provided in Newmont in Peru case study
2. Improving business portfolio management of Newmont Montesinos
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 Newmont Montesinos
Strengths Newmont in Peru | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Newmont Montesinos in Newmont in Peru Harvard Business Review case study are -
High brand equity
– Newmont Montesinos has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Newmont Montesinos to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Newmont Montesinos digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Newmont Montesinos 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.
Highly skilled collaborators
– Newmont Montesinos 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 Newmont in Peru HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Newmont Montesinos is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Newmont Montesinos 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 John McMillan, Pablo Zoido 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.
Effective Research and Development (R&D)
– Newmont Montesinos 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 Newmont in Peru - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Newmont Montesinos 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.
High switching costs
– The high switching costs that Newmont Montesinos has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Newmont Montesinos in the sector have low bargaining power. Newmont in Peru has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Newmont Montesinos to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Newmont in Peru 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.
Sustainable margins compare to other players in Global Business industry
– Newmont in Peru firm has clearly differentiated products in the market place. This has enabled Newmont Montesinos to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Newmont Montesinos to invest into research and development (R&D) and innovation.
Training and development
– Newmont Montesinos has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Newmont in Peru 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 Newmont in Peru | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Newmont in Peru are -
Increasing silos among functional specialists
– The organizational structure of Newmont Montesinos is dominated by functional specialists. It is not different from other players in the Global Business segment. Newmont Montesinos needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Newmont Montesinos to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Newmont Montesinos has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Newmont Montesinos even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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 Newmont Montesinos supply chain. Even after few cautionary changes mentioned in the HBR case study - Newmont in Peru, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Newmont Montesinos vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Newmont in Peru HBR case study mentions - Newmont Montesinos 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.
Products dominated business model
– Even though Newmont Montesinos has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Newmont in Peru should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Newmont in Peru, is just above the industry average. Newmont Montesinos needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Newmont Montesinos 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.
Skills based hiring
– The stress on hiring functional specialists at Newmont Montesinos 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.
Low market penetration in new markets
– Outside its home market of Newmont Montesinos, firm in the HBR case study Newmont in Peru needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Newmont Montesinos products
– To increase the profitability and margins on the products, Newmont Montesinos needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Newmont Montesinos has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Newmont in Peru | 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 Newmont in Peru are -
Creating value in data economy
– The success of analytics program of Newmont Montesinos has opened avenues for new revenue streams for the organization in the industry. This can help Newmont Montesinos to build a more holistic ecosystem as suggested in the Newmont in Peru case study. Newmont Montesinos can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Newmont Montesinos in the consumer business. Now Newmont Montesinos can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Newmont Montesinos 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 Newmont Montesinos to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Newmont Montesinos in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
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 Newmont Montesinos 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Newmont Montesinos is facing challenges because of the dominance of functional experts in the organization. Newmont in Peru 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.
Better consumer reach
– The expansion of the 5G network will help Newmont Montesinos to increase its market reach. Newmont Montesinos 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. Newmont Montesinos can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Newmont Montesinos 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.
Learning at scale
– Online learning technologies has now opened space for Newmont Montesinos to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Buying journey improvements
– Newmont Montesinos can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Newmont in Peru 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.
Manufacturing automation
– Newmont Montesinos 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.
Loyalty marketing
– Newmont Montesinos 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.
Threats Newmont in Peru External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Newmont in Peru are -
Increasing wage structure of Newmont Montesinos
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Newmont Montesinos.
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 Newmont Montesinos in the Global Business sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Newmont Montesinos can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Newmont Montesinos 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.
Consumer confidence and its impact on Newmont Montesinos 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Newmont Montesinos with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Environmental challenges
– Newmont Montesinos needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Newmont Montesinos can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Regulatory challenges
– Newmont Montesinos 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.
Stagnating economy with rate increase
– Newmont Montesinos 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Newmont Montesinos 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 Newmont in Peru .
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 Newmont Montesinos business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Newmont in Peru 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 Newmont in Peru 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 Newmont in Peru 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 Newmont in Peru 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 Newmont in Peru 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 Newmont Montesinos needs to make to build a sustainable competitive advantage.