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 – increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, there is increasing trade war between United States & China, wage bills are increasing, increasing energy prices,
competitive advantages are harder to sustain because of technology dispersion, 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 -
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.
Innovation driven organization
– Kumba Iron Ore is one of the most innovative firm in Metal Mining sector.
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.
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.
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.
Operational resilience
– The operational resilience strategy of Kumba Iron Ore comprises – understanding the underlying the factors in the Metal Mining 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.
Digital Transformation in Metal Mining industry
- digital transformation varies from industry to industry. For Kumba Iron Ore digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kumba Iron Ore 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 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.
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.
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.
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 -
Aligning sales with marketing
– From the outside it seems that Kumba Iron Ore needs to have more collaboration between its sales team and marketing team. Sales professionals in the Metal Mining industry have deep experience in developing customer relationships. Marketing department at Kumba Iron Ore can leverage the sales team experience to cultivate customer relationships as Kumba Iron Ore is planning to shift buying processes online.
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 dependence on Kumba Iron Ore ‘s star products
– The top 2 products and services of Kumba Iron Ore still accounts for major business revenue. This dependence on star products in Metal Mining industry has resulted into insufficient focus on developing new products, even though Kumba Iron Ore has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the Metal Mining industry, Kumba Iron Ore 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.
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.
Skills based hiring in Metal Mining industry
– The stress on hiring functional specialists at Kumba Iron Ore has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Need for greater diversity
– Kumba Iron Ore has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High 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.
No frontier risks strategy
– From the 10K / annual statement of Kumba Iron Ore, it seems that company is thinking out the frontier risks that can impact Metal Mining industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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.
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.
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.
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 Kumba Iron Ore 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.
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.
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.
Leveraging digital technologies
– Kumba Iron Ore 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.
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.
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.
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.
Buying journey improvements
– Kumba Iron Ore can improve the customer journey of consumers in the Metal Mining industry by using analytics and artificial intelligence. It 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
– Kumba Iron Ore can use the latest technology developments to improve its manufacturing and designing process in Metal Mining sector. 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.
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.
High dependence on third party suppliers
– Kumba Iron Ore 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.
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. Kumba Iron Ore 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.
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.
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.
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.
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.
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.
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.
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.
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.
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. Kumba Iron Ore needs to understand the core reasons impacting the Metal Mining industry. This will help it in building a better workplace.
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.