Kumba Iron Ore (KIOJ) SWOT Analysis / TOWS Matrix / MBA Resources
Metal Mining
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Kumba Iron Ore (South Africa)
Based on various researches at Oak Spring University , Kumba Iron Ore is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, 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, geopolitical disruptions,
increasing commodity prices, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Kumba Iron Ore can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kumba Iron Ore, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kumba Iron Ore 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 Kumba Iron Ore can be done for the following purposes –
1. Strategic planning of Kumba Iron Ore
2. Improving business portfolio management of Kumba Iron Ore
3. Assessing feasibility of the new initiative in South Africa
4. Making a Metal Mining sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kumba Iron Ore
Strengths of Kumba Iron Ore | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kumba Iron Ore are -
Superior customer experience
– The customer experience strategy of Kumba Iron Ore in Metal Mining industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Kumba Iron Ore 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.
Organizational Resilience of Kumba Iron Ore
– The covid-19 pandemic has put organizational resilience at the centre of everthing Kumba Iron Ore does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Kumba Iron Ore has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Metal Mining industry. Secondly the value chain collaborators of Kumba Iron Ore have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Kumba Iron Ore is one of the leading players in the Metal Mining industry in South Africa. It is in a position to attract the best talent available in South Africa. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Kumba Iron Ore has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kumba Iron Ore staying ahead in the Metal Mining industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management in the Metal Mining industry
– Kumba Iron Ore is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Metal Mining industry
– Kumba Iron Ore has clearly differentiated products in the market place. This has enabled Kumba Iron Ore to fetch slight price premium compare to the competitors in the Metal Mining industry. The sustainable margins have also helped Kumba Iron Ore to invest into research and development (R&D) and innovation.
High brand equity
– Kumba Iron Ore has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kumba Iron Ore to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Kumba Iron Ore 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 Kumba Iron Ore is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Kumba Iron Ore emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Kumba Iron Ore is one of the most innovative firm in Metal Mining sector.
Low bargaining power of suppliers
– Suppliers of Kumba Iron Ore in the Basic Materials sector have low bargaining power. Kumba Iron Ore has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kumba Iron Ore to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of Kumba Iron Ore | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kumba Iron Ore are -
Slow to strategic competitive environment developments
– As Kumba Iron Ore is one of the leading players in the Metal Mining industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Metal Mining industry in last five years.
Interest costs
– Compare to the competition, Kumba Iron Ore 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.
Capital Spending Reduction
– Even during the low interest decade, Kumba Iron Ore 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 Metal Mining industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Kumba Iron Ore is dominated by functional specialists. It is not different from other players in the Metal Mining industry, but Kumba Iron Ore needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kumba Iron Ore to focus more on services in the Metal Mining industry rather than just following the product oriented approach.
High bargaining power of channel partners in Metal Mining industry
– because of the regulatory requirements in South Africa, Kumba Iron Ore is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Metal Mining industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kumba Iron Ore is slow explore the new channels of communication. These new channels of communication can help Kumba Iron Ore to provide better information regarding Metal Mining products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of South Africa, Kumba Iron Ore needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative at Kumba Iron Ore, in the dynamic environment of Metal Mining industry it has struggled to respond to the nimble upstart competition. Kumba Iron Ore has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Kumba Iron Ore has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Metal Mining industry over the last five years. Kumba Iron Ore 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.
Products dominated business model
– Even though Kumba Iron Ore has some of the most successful models in the Metal Mining industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Kumba Iron Ore should strive to include more intangible value offerings along with its core products and services.
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 Kumba Iron Ore supply chain. Even after few cautionary changes, Kumba Iron Ore is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kumba Iron Ore vulnerable to further global disruptions in South East Asia.
Kumba Iron Ore Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Kumba Iron Ore are -
Creating value in data economy
– The success of analytics program of Kumba Iron Ore has opened avenues for new revenue streams for the organization in Metal Mining industry. This can help Kumba Iron Ore to build a more holistic ecosystem for Kumba Iron Ore products in the Metal Mining industry by providing – data insight services, data privacy related products, data based consulting services, 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, Kumba Iron Ore can use these opportunities to build new business models that can help the communities that Kumba Iron Ore operates in. Secondly it can use opportunities from government spending in Metal Mining sector.
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. Kumba Iron Ore can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Metal Mining industry, but it has also influenced the consumer preferences. Kumba Iron Ore can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Kumba Iron Ore has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Metal Mining sector. This continuous investment in analytics has enabled Kumba Iron Ore to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kumba Iron Ore to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kumba Iron Ore 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kumba Iron Ore 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 Kumba Iron Ore to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Kumba Iron Ore 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.
Loyalty marketing
– Kumba Iron Ore 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.
Use of Bitcoin and other crypto currencies for transactions in Metal Mining industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kumba Iron Ore in the Metal Mining industry. Now Kumba Iron Ore can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Kumba Iron Ore to increase its market reach. Kumba Iron Ore 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kumba Iron Ore can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kumba Iron Ore in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Metal Mining industry, and it will provide faster access to the consumers.
Threats Kumba Iron Ore External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Kumba Iron Ore are -
Easy access to finance
– Easy access to finance in Metal Mining industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kumba Iron Ore can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kumba Iron Ore 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 Kumba Iron Ore prominent markets.
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 Kumba Iron Ore in the Metal Mining sector and impact the bottomline of the organization.
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 Kumba Iron Ore.
Increasing wage structure of Kumba Iron Ore
– 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 Kumba Iron Ore.
Stagnating economy with rate increase
– Kumba Iron Ore 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 Metal Mining industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kumba Iron Ore in Metal Mining industry. The Metal Mining 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 Kumba Iron Ore 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 Metal Mining industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Kumba Iron Ore has witnessed rapid integration of technology during Covid-19 in the Metal Mining industry. As one of the leading players in the industry, Kumba Iron Ore needs to keep up with the evolution of technology in the Metal Mining 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.
Shortening product life cycle
– it is one of the major threat that Kumba Iron Ore is facing in Metal Mining sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Kumba Iron Ore 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. Kumba Iron Ore can take advantage of this fund but it will also bring new competitors in the Metal Mining industry.
Regulatory challenges
– Kumba Iron Ore 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 Metal Mining industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Metal Mining industry are lowering. It can presents Kumba Iron Ore with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Metal Mining sector.
Weighted SWOT Analysis of Kumba Iron Ore Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Kumba Iron Ore 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 Kumba Iron Ore 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 Kumba Iron Ore 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 Kumba Iron Ore 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 Kumba Iron Ore needs to make to build a sustainable competitive advantage.
