Business Recovery Plan for Rio Tinto - Case Study Example

Business Recovery Plan for Rio Tinto, Japan – A Case Study EXECUTIVE SUMMARY It is one of the most challenging tasks to resume business immediatelyafter being struck by a natural calamity. There is a question of rebuilding the business and recollecting on the key aspects of equipment, stock, machinery, records, along with the damage done. Any form of recovery plan is not foolproof unless there is a robust back-up to salvage during the later clean-up process. Depending on the severity of the disaster, immediate steps need to be taken to continue working unabated. Adopting a comprehensive continuity plan will ensure recollection to be of less-hassle. Any form of emergency measure involves a set of complex chain of tasks, players, and resources, in a channel of coordination that is embedded on interdependencies for an efficient and smooth recovery of operations (Turoff 2002, 29-32). This paper makes an attempt to investigate what factors were responsible for the business crisis to arise in Rio Tinto, Japan, especially for resuming on a normal day, just after the calamity. This necessitates the need for more coordination and management of the extremities thereafter and what procedures and mechanisms to be typically utilized for coordination, decision-making and product development. Using exact criteria and in the light of the current practices of operations and resources utilizing this case study, this paper has been strategically organized as follows, a brief description of the issues, causes, alternatives, preceding the decision criteria for implementation of strategic alternatives, along with the recommended approach. Table of Contents Table of Contents 3 A.Major Issues 4 B.Causes and Effects of Crisis 4 C.Alternative Measures 5 D.Decision Criteria 6 E.Solutions 8 F.Conclusion 8 Reference List 10 A. Major Issues The major issues that are typically emerging after any form of emergency are mostly having a relation to interdependencies in a business, as a business has multiple-level of interdependencies in terms of job responsibilities, resources, assigned personnel, and the flow of information. These are physically scattered across geographies, boundaries and departments. Therefore, any rebuilding task after an emergency involves a strategic response of either reconsidering the existing entities, dismissing others and to reconstruct throughout the course of responses to rebuild the premise. The standard procedures include standardization, planning, mutual adjustment and routine analysis (Malone 1994, 357-370; Alaybeyoğlu, Albayrak and Gürbüz 2012, 1-4). These decisions, howsoever varied and dynamic, will provide directions on problems solving using interdependencies. Product-design, supply-chain management, resource-management, are all affected in the course of the sudden change, uncertainty, pressure and need for further change. If the management is not aware of what was lacking in the present management system, coordination and emergency support becomes difficult (Alaybeyoğlu, Albayrak and Gürbüz 2012, 1-4) Dealing with the safety and the welfare of the employees as well as the community being impacted, from an ethical and legal perspective are the plaguing issues for consideration for a strategic planning by the company. B. Causes and Effects of Crisis From the perspective of building business resilience, the earthquake and the following tsunami on March 11, 2011, threatened businesses. What became important was to predict every incident, to face every disaster in the future and be prepared for it. This relates to the perspective of considering people, environment, assets and resources of an organization and managing them efficiently to reduce risk and the combat with the outcomes of each decision made related to those business elements. The power systems were suspended immediately, including the traffic lights and the lighting systems in the business premise and the conveyer systems for the supply of heavy metals. This led to the stage of a huge reconstruction requirement in every sector, from homes to power plants of capacities of around 130 million tones or so (Rio Tinto 2012, 2-232). Employees were worried about shortage of food and fuel supplies. Those of who were dependent on public transport systems, such as trains, got worried on how to reach to office and whether the routes would be running normally. Disruption in production cycle has a direct relation to the lag in demand for raw materials, tightening the monetary and credit cycle (Betros 2012). One of the most enervating incidents was to witness a gas station catch fire with no information left for the employees on what is going to happen the next day, when they are expected to get back to business station. No one had any clue on the amount and scale of damage done and what would be the best strategy to utilize the resources and right teams for regeneration. C. Alternative Measures On the basis of the major issues identified to be affecting the immediate business environment at Rio, after the Japan earthquake incident, it became necessary for the company to search for alternative measures to consider. When rebuilding, Rio should consider the factors of its premise, equipment, machinery, stock of resources and other official records that might have been damaged due to the earthquake (Betros 2012). The homes of the employees, transport networks to connect to suppliers and reaching out to the customers to sell and purchase products and services might get difficult. Therefore, the alternatives should adopt the following general strategies in the present context: 1. If the structural premise is shattered then it is necessary to collect the recoverable items and operate only for reduced hours or limit the supply and delivery of products and services, till situations are normal for work. 2. Facilities of temporary work from home could be made available to the employees to solve the temporary problems of relocating, taking new lease or even temporary accommodation. 3. In consideration to buying new equipments and saving cost for new investments damaged by the natural calamity, it would be proper to hire or lease the equipments for the time being or even outsource to other agencies or counterparts, cross-borders to manage the sale from other territories and geographies. 4. It is not possible to repair or recover all records and documents lost, but the ones to be procured from the back-up and offsite locations could be put back into a new filing system. 5. Reconstruction could be initiated on a war-footing through help from all possible agencies and sister concerns, working in collaboration, to regenerate financial data or even sale and budgeting related information. All these steps direct to a marketing strategy decision-making as a multi-criteria tool for problems solving. In order to provide the exact guide to problem solving, the management needs to consider the decision criteria and the metrics. The data could be collected from varied qualitative and quantitative sources and weighed across a cross-referenced matrix by scoring for a consensus decision given by a group of experts, chosen by the company. This could be calculated using a TOWS matrix analysis (Weihrich 1982, 54-66). This tool helps in determining the strategic alternative using a cross-matrix. D. Decision Criteria The primary concern of the management is the safety and impact of radiation on human-health. However, in order to propose a decision-making matrix for a strategic marketing plan, the management needs to take into consideration all aspects of the organization (Bertos 2012). The process of decision-making helps identify the criteria that are effective in the process of defining the best criteria for strategic marketing scenario. Every criterion takes into account dependencies and interdependencies at various levels of management. In choosing the right criterion, a pair-wise comparisons of the problem and their corresponding importance need to be ascertained through a proper weightage. These criterions could be qualitative or quantitative and the data could be collected from various sources. Using the criteria identified, the TOWS analysis could help identify the internal strengths and weaknesses and the external opportunities and threats to recommend the solutions. Strengths and opportunities help in identifying the strategic alternative strategies using a quadrant method in the following format: Internal Strengths Rio Tinto possesses a team of highly qualified and professionally-experienced management staff who are extremely object-oriented and goal-seeking in their approach. The code of business conduct is in place with a personal commitment to the integrity and compliance among employees. (Rio Tinto 2012, 2-232). A sound Business Resilience and Recovery Programme (BRRP) has been implemented to take into account the welfare of the employees and the communities affected by the earthquake (Rio Tinto 2012, 2-232). Approaching a well-coordinated and integrated approach, a healthy relationship with the suppliers and customers has been developed Internal Weaknesses Immediately after the earthquake, all operations have come to a halt, as employees are clueless about what and how they do return to the office and resume business. Getting back to normal business immediately after temporary settling down with their personal loses is also a vital issue. The supply of resources is insufficient to sustain on a long-tem (Betros 2012). External Opportunities Expected increase in the demand of steel production for rebuilding purposes. Rapid growth of Asian economies might require infrastructure for growth, posing an opportunity for the company. Strengths-Opportunities Strategies With an experienced team and probable demand, Rio Tinto will have a prospective chance of expansion. Weaknesses-Opportunities Strategies In this case, Rio might have to explore for partnerships and collaborations for pulling up and sharing resources as there would be a scarcity in the region as a whole. This might also incur sharing of expenditure. External Threats The national and international communication channels are severely affected, impacting supply chains. Chances of contamination are high Rebuilding the infrastructure might incur costs and labour. Strengths-Threats Strategies The BRRP will effectively help in mitigating the impact of devastation and need to be well-implemented. Weaknesses-Threats Strategies The operating base could be shifted to other growing Asian economies, which would help in boosting business. Another possibility is to sell off the Japanese company and still retain its employees or even close down all operation. E. Solutions From the criteria identified for alternative strategic management, Rio-Tinto needs to develop its BRRP as the ideal strategy to survive any catastrophe, such as earthquake. Another alternative is to build on the collaborations and network channels to strategically deal with any unexpected incident, in this case the earthquake and its immediate after-effects. Scarcity of resources is a prominent issue for the employees, their families and the communities impacted. The BRRP action plan will help allocate resources, equipments, and personnel support for a robust mitigation plan. Rio Tinto could survive the catastrophe, within the contagious situation of distress of Japanese economy. The alternatives provide a way-out to overcome the loss suffered, from a macro-to micro perspective and internally implement approaches to maximize profits and plan for expansion. Translocation isn’t a good option as it might be cost-extensive and create problems of unemployment. Also selling off the Japanese business counterpart might impart a negative image to the company’s corporate stand and global acceptability. F. Conclusion Any kind of natural disaster causes unavoidable issues and raises questions of uncertainties on the future of organizations. A robust Business Resilience and Recovery Programme (BRRP) is an appropriate approach to decide an achievable set of decision criteria for mitigation and analysis purposes. To ensure that such a plan is achievable and realistic, there should be regular monitoring and evaluations planned, on a yearly basis. Reference List Alaybeyoğlu, Elif, Albayrak, Esra Y. and Gürbüz, Tuncay. 2012. “Criteria Weighting and 4-P Planning in Marketing Using Analytic Network Process”. Paper Presented at the International Multi-conference of Engineers and Computer Scientist, Hong Kong, March 14-16. Betros, Chris. 2012. “Rio Tinto Japan. Japan Today”. Last modified June 4. http://www.japantoday.com/category/executive-impact/view/rio-tinto-japan. Malone, W. Thomas, and Crowston, Kevin. 1990 "What is Coordination Theory and How Can It Help Design Cooperative Work Systems," Paper Presented at the Conference on Computer Supported Cooperative Work, California, October. Rio Tinto. 2012. Annual Report 2012. Last modified December 31. http://www.riotinto.com/reportingcentre2012/pdfs/rio_tinto_2012_annual_report.pdf. Turnoff, Murray. 2002. "Past and future emergency response information systems” Communications of the ACM 45: 29-32. Weihrich, Heinz. 1982. "The TOWS matrix—a tool for situational analysis." Long range planning 15: 54-66. Read More