Handling Weaknesses and Threats for Fortescue Company - Assignment Example

Running head: FORTESCUE METALS GROUP LIMITED Executive Summary Fortescue Company was formedin 2003 by Andrew Forest its chairperson. Since then the company has undergone a tremendous growth in the iron ore industry. It has then evolved against all odds to become the world’s third largest producer of iron ore. Amongst the first mineral deposit mines discovered which was a major milestone for the progress of the company was at the Pilbara Chi Chester range and Helmsley range. This Pilbara region was barely tapped and China, which is located in proximity to Australia would provide a ready and long term market for the iron ore product. This is because china a growing economy, creating a higher demand. After subsequent years of iron ore production, the company started exporting its products to china and eventually to other parts of Asia. In 2010, the company announced its major plans to triple its production. This lead to expansion of a massive railway line to access to other mining sites and also an extension of the port1. Then mining started officially in 2014. Among the new plants which were opened were; Solomon hub, and Christmas creek. This leads to the development of infrastructure in the region. A way of handling these weaknesses and threats is by making sure that the company capitalizes on its opportunities. This is by recruiting committed and experienced personell and making sure that their offices are not many. These will ensure that Frotesque metal group limited deals with the rivalry in this competitive industry. Introduction Fortesque metal group limited is located in the rich iron ore area of pilbara in western Australia. This area has a close proximity to asia and more so india2. A decade over since its establishment, fortesque has undergone a tremendous growth in the mining of iron ore. It was formed around the kitchen table of its chairman Andrew Forrest. The company immediately began to explore the rich pilbara regions3. Identifying mines and mining them. Construction began at the first mine at cloud break. This is the Frotescues first mine site and it produces more than forty million tons of iron ore in a year. Due to the horizontal nature of this mine site, there is need to use new methods in mining the ore. After mining is done the mineral is crushed, screened and processed, then transported to the port. A lot of business firms with an objective of achieving a competitive advantage for giant firms in the industry need to regularly analyze all the aspects of the company’s operations and the stratagems. This is the only single method that the company has a chance of a healthy competition in the market. This is the only way that the company stands a chance of competing healthily in the market. SWOT analysis has been used by many companies since it can help a company expand its future plans. This is only achievable through reviewing the firm’s strengths, weaknesses, opportunities and threats. This is vital because the SWOT analysis explores and puts into consideration both internal and external issues as entity to each company. For example, in this case, Frotesque metal group limited or other companies are required to consider trade explicit factors to assist them in conducting a fruitful business analysis4. TOWS Analysis of the Frotesque metal group limited Threats Numerous external threats are numerous within the Frotesque metal group limited and the whole industry. Another issue is that many big firms are expected to exhibit considerable competition. Another threat is having so many offices, which do not work appropriately and this needs to be reduced. Developing trust on customers is a challenge because tax and book-keeping industries usually have most important financial information of their clientele. The company also risks losing many workers who are unable to cope with the dressing code, which is red and black. In addition, mode of payment is also tiresome to the clientele and they risk losing a couple of customers who may decide to seek other alternatives. Although the company is unique, success is not guaranteed because if every tax season it gets input from everyone within the company, without setting the demands then it is bound to fail. Opportunities One of the notable opportunities of this Frotesque metal group limited business is that it has the capabilities of joining functions with the purpose of offering extra business prospects all over the year. The other opportunity is the group having trainings for their employee, according to the countries where their offices are found. Most officers are doing a great job which is likely to be beneficial to the company5. Through creating a sale proprietary tax software assists in the creation of residual income after the services of the group are off-pick. The other opportunity for Frotesque Metal group is recruitment advantages that may be carried out through teleworking. This has assisted the group in building on the prospect for expanding the business swiftly during the moments when the industry ramps up. Another opportunity is that Frotesque metal group limited, gives one an opportunity to change his/her life. Another opportunity is bringing discipline by coming together and working as a team6. The company should come up with a department in the company can come together on a weekly basis and discuss what is working for them and what needs to be done to improve the offices. Weaknesses One notable weakness of the Frotesque Metal Group limited Services is the nature of company’s work, which is mostly un-regular. The tax service industry wants long hours at tax time, nevertheless, the accessibility of year-round work typically appears extremely narrow. This aspect is probable to make some obstacles for the business in making sure that the qualified employees are retained in in the company. Rather, the company may be forced to look for trained employees on short notice for the tax season duration. This issue mainly arises when it comes to book-keeping, which is usually much busier when the year comes to an end compared to the other times of the year. Strengths In many corporations, employees are viewed to be the source of strength, depending on how skillful they are, how experienced employees are, accompanied with specialized qualifications. A strength viewed in Frotesque metal group limited is high profit margin and this has been achieved through relatively low operating cost7. As much as the Frotesque metal group limited may require expanding its services to other areas, if desired, the business may need few branches that are open and a small office space. Another strength of the company is that their manufacturing operations are not expensive. Goals of Frotesque Metal Groups This report provides evaluation and analysis of current profitability, liquidity and financial stability of Frotesque metal group limited. The following statistics give the basis of this report. It has different sub sectors which include; primary metal manufacturing, fabricated metal products, machinery manufacturing and transportation equipment manufacturing. Frotesque metal group is an iron ore production and exploration company with various assets. It is located in the pilbara region of western region of Australia. It has various reserves of hematite and it is operating hubs in chi Chester and Solomon. Frotesque metal group metal has a major goal of becoming a supplier and producer of low cost iron ore in the whole of Western Australia8. The company also intends to expand its business to woe more customers and become world largest producer and exporter of iron and other metal products. The management is composed of the management team. This team includes: chief executive officer, chief financial officer, director of operation, direct of external relations and company’s secretary. The company is engaged in mining of ores and its properties in the operation of the supply chain used in railway building and port supply. Fortescue Company has also supported infrastructure in the building of the Port at the headland in Australia. This report analyses how the company has changed the infrastructural structure of Western Australia. It has various other companies which make the forteque group. They include: chistester hub, cloud break, Christmas creek, BC iron and Solomon hub. All this companies deal in production of iron under the same name. This company is entirely focused on maximizing its profit and expansion9. Fortestecue is set to take the iron ore industry by a storm. It has consolidated its position as Australia’s largest supplier of iron ore to the world at large. This company strongly believes in ethics and giving back to the society. It maintains that by proper training and employment are the crucial ways of breaking the barriers of society and the entire community. To this effect: Fortescue has set up a vocational training center, which offers courses related to mining and gives career guidance. This in turn gives employment opportunities. The company is recognized worldwide since it has a net worth that can offer contracts to other companies increasing its profit value. Recommendations Fortescue company could address several recommendations to remain its competitive nature in the global market and increase productivity. Retrenchment of employees One major activity that Fortescue company needs is to cut down on its expenses. This would be achieved in many ways, among them retrenchment. The company has had excess offices and employees when operations are low. Retrenchment is simply reducing the workforce to enable the company to be financially healthy and viable. They should also establish measures in future hiring to recruit only enough and qualified laborers. This would also involve the reduction of the offices that are not in use10. Market expansion With numerous firms making the production of iron ore even stiffer, marketing strategies are required by the management to ensure they indulge even deeper into the global market. Market expansion is an attractive way to maximize sales after the current market and customers have been maximized11. Fortescue can achieve this by first considering its outreach to the current markets, other markets that exist for its iron ore supply, the easiest potential markets to reach as well as the markets that would offer the greatest sales opportunities. This would also involve better positioning, segmenting and targeting. Review competition nature Competition is stiffening following companies such as Rio Tinto Ltd and others. Fortescue should learn their competitors’ strategies to be in a position to improve on theirs. This would be done by understanding their operations and their costs. Lower costs and better services could be the reason for many customers deciding to shift to their competitors12. Employees should be well trained and motivated to offer the best achievable services. With China is developing its sources of supply, it would be advisable for Fortescue to close down the border merger with China and focus on other potential markets. Customer retention The company needs to develop customer trust to retain them. Customer retention entails the activities undertaken by a company to reduce customer defection or the churn rate. The objective here would be to keep their customers engaged and interested in their products. Loyal customers also act as marketers. Improved services and favorable costs are good means of customer retention. Improved services are achieved when employees have the required training and motivation13. Fortescue should therefore improve their workforce conditions, including the dress code and mode of payment. This helps to prevent the rate of qualified staff turnover. Fortescue company should also put in place ways to deal with the environmental sensitivities so that they do not affect their production rate. Employee Retention The company has faced the challenge of employee turnover as a result of its means of payment as well as the dressing code for staff members. High staff turnover costs companies and businesses in both time and productivity. Fortecues should establish employee retention strategies such as engaging them in decision making. For instance, they should be involved in deciding the best dressing code considering the kind of work they do. They should also train their staff and make them sign contracts on admission14. Environmental sensitivity Environmental sensitivity is an acquired condition usually attributed to environmental exposures that affect vulnerable individuals. The company should look for effective means to deal with its effect on people. For instance, the company could take its operations to a place far away from homes, then immunize or provide their staff with mineral supplements. Set goals The company could set some goals and work towards achieving them within a specified time frame. To ensure it is effective, a third party may be involved to oversee the whole process of implementing them. Working towards some set goals improves a company’s productivity. Bibliography Hastings, L. "Legal update–ASIC v Fortescue Metals Group Ltd." (2011). Ipcrow, L. "Fortescue Metal Group Ltd." Publications Oboulo. com (2014). Jamal, Zainab. Three essays in modeling customer retention. Thesis (Ph. D.)--UCLA, 2006. Mazumdar, Dipak, and Sandip Sarkar. Globalization, labor markets and inequality in India. Vol. 79. Idrc, 2008. Phillips, Chris, Isabel Doole, and Robin Lowe. "International Marketing Strategy: Analysis, Development and Implementation." Wilson, Jeffrey D. "Resource nationalism or resource liberalism? Explaining Australias approach to Chinese investment in its minerals sector." Australian Journal of International Affairs 65, no. 3 (2011): 283-304. Read More