Rio Tinto Group's Sustainable Development Agenda SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Rio Tinto Group's Sustainable Development Agenda
During Sir Robert Wilson's 30+-year Rio Tinto career, the company evolved from taking a reactive response to external stakeholder criticism to a proactive position to help the mining industry embrace sustainable development practices. Wilson championed Rio Tinto's efforts to transform the company with initiatives such as those that countered apartheid in South Africa; introduced conservation programs in Madagascar and Western Australia; and established the Inland Sea Shorebird Reserve project in Utah-efforts which have all become models for the mining industry. He championed the Global Mining Initiative and the Mining Minerals and Sustainable Development project to encourage the improvement of industry sustainable development practices thorough shared learning and dialogue. Along with 40 transnational companies, Rio Tinto signed the Global Compact, which supported the promotion of sustainable development. Despite all of these activities, Rio Tinto encountered significant criticism from a variety of stakeholders. As Sir Robert Wilson prepared to hand over the reins of the company to oil industry veteran Paul Skinner, he contemplated the insights he would pass along to his successor. He was certain that society's expectations of the corporate responsibility of all industry, and especially of MNCs, were going to continue to increase. He was also certain that sustainable development had to be more than a one-off effect on communities in which they operate. Yet, there were important questions to be answered: Sustainable development sounded good, but could Rio Tinto make the business case for embracing this approach? Why had some stakeholder groups persisted in believing that a mining company claiming to embrace sustainable development was a sham? What steps would he recommend that Skinner take to continue Rio Tinto's sustainable development agenda?
Swot Analysis of "Rio Tinto Group's Sustainable Development Agenda" written by Mary B. Teagarden, Andreas Schotter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Rio Tinto facing as an external strategic factors. Some of the topics covered in Rio Tinto Group's Sustainable Development Agenda case study are - Strategic Management Strategies, Ethics, Risk management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Rio Tinto Group's Sustainable Development Agenda casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, increasing energy prices, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy,
cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Rio Tinto Group's Sustainable Development Agenda
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Rio Tinto Group's Sustainable Development Agenda case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Rio Tinto, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Rio Tinto 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 Group's Sustainable Development Agenda can be done for the following purposes –
1. Strategic planning using facts provided in Rio Tinto Group's Sustainable Development Agenda case study
2. Improving business portfolio management of Rio Tinto
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Rio Tinto
Strengths Rio Tinto Group's Sustainable Development Agenda | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Rio Tinto in Rio Tinto Group's Sustainable Development Agenda Harvard Business Review case study are -
Strong track record of project management
– Rio Tinto is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Rio Tinto is one of the leading recruiters in the industry. Managers in the Rio Tinto Group's Sustainable Development Agenda are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Rio Tinto Group's Sustainable Development Agenda 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 Leadership & Managing People industry
– Rio Tinto Group's Sustainable Development Agenda firm has clearly differentiated products in the market place. This has enabled Rio Tinto to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Rio Tinto to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Rio Tinto 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 Rio Tinto Group's Sustainable Development Agenda HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Rio Tinto has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Rio Tinto Group's Sustainable Development Agenda 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Rio Tinto digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Rio Tinto 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.
Cross disciplinary teams
– Horizontal connected teams at the Rio Tinto 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.
Ability to lead change in Leadership & Managing People field
– Rio Tinto 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 Rio Tinto in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Rio Tinto
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Rio Tinto does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Rio Tinto in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Rio Tinto 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 Mary B. Teagarden, Andreas Schotter 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.
Weaknesses Rio Tinto Group's Sustainable Development Agenda | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Rio Tinto Group's Sustainable Development Agenda are -
Lack of clear differentiation of Rio Tinto products
– To increase the profitability and margins on the products, Rio Tinto needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Rio Tinto 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 - Rio Tinto Group's Sustainable Development Agenda 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 Rio Tinto Group's Sustainable Development Agenda, is just above the industry average. Rio Tinto 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Rio Tinto Group's Sustainable Development Agenda 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 Rio Tinto 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Rio Tinto, firm in the HBR case study Rio Tinto Group's Sustainable Development Agenda needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Rio Tinto Group's Sustainable Development Agenda 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 Rio Tinto has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Rio Tinto 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. Rio Tinto 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.
Interest costs
– Compare to the competition, Rio Tinto 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 cash cycle compare to competitors
Rio Tinto 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.
Capital Spending Reduction
– Even during the low interest decade, Rio Tinto 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.
Increasing silos among functional specialists
– The organizational structure of Rio Tinto is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Rio Tinto needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Rio Tinto to focus more on services rather than just following the product oriented approach.
Opportunities Rio Tinto Group's Sustainable Development Agenda | 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 Group's Sustainable Development Agenda are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Rio Tinto can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Rio Tinto 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 Leadership & Managing People segment.
Creating value in data economy
– The success of analytics program of Rio Tinto has opened avenues for new revenue streams for the organization in the industry. This can help Rio Tinto to build a more holistic ecosystem as suggested in the Rio Tinto Group's Sustainable Development Agenda case study. Rio Tinto can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Rio Tinto 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, Rio Tinto Group's Sustainable Development Agenda, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Rio Tinto 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. Rio Tinto 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Rio Tinto in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Buying journey improvements
– Rio Tinto can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Rio Tinto Group's Sustainable Development Agenda 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.
Developing new processes and practices
– Rio Tinto can develop new processes and procedures in Leadership & Managing People 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Rio Tinto 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 Rio Tinto to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Rio Tinto 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Rio Tinto 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.
Using analytics as competitive advantage
– Rio Tinto 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 Group's Sustainable Development Agenda - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Rio Tinto to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Rio Tinto 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.
Threats Rio Tinto Group's Sustainable Development Agenda 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 Group's Sustainable Development Agenda are -
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 Rio Tinto in the Leadership & Managing People sector and impact the bottomline of the organization.
Environmental challenges
– Rio Tinto 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. Rio Tinto can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
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 Rio Tinto business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Rio Tinto 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 Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Rio Tinto 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 Rio Tinto Group's Sustainable Development Agenda .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Rio Tinto in the Leadership & Managing People industry. The Leadership & Managing People 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.
Technology acceleration in Forth Industrial Revolution
– Rio Tinto has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Rio Tinto needs to keep up with the evolution of technology in the Leadership & Managing People 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.
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.
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. Rio Tinto needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Rio Tinto is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Rio Tinto 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Rio Tinto can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Rio Tinto Group's Sustainable Development Agenda 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 Group's Sustainable Development Agenda 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 Group's Sustainable Development Agenda 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 Group's Sustainable Development Agenda 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 Group's Sustainable Development Agenda 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 Rio Tinto needs to make to build a sustainable competitive advantage.
